Rwanda govt to increase taxes up to 100pc to on second hand garment

The Prime Minister of Rwanda, Anastase Murekezi presenting the government’s industrial activities to parliament on Monday unveiled textile development strategy as the government has committed itself to develop local textile firms and phase out second hand garments in the next three years.

To discourage consumption of imported products, the government has decided to increase taxes up to 100% on second hand products – especially garments and leather products – starting the next fiscal year until they get off the market.

However, discouraging importation must be accompanied by improving local textile industry for which the government is helping Rwanda’s textile firm (UTEXRWA) to produce more and better quality garments and grouping small tailors into firms.

He further added that they provided a particular space for textile firms at the Special Economic Zone and they are encouraging private sector to invest in textile industry.

The government will also encourage the production of raw materials such as silk to further reduce Rwanda’s trade deficit which widened by 12.7% in January and February.

A statement from the central bank shows that the country’s trade deficit widened to $297.2 million (about Rwf232.4 billion) largely due to an increase in formal imports that rose by about 7.2%, as well as a 9.7% decrease in the value of Rwanda’s exports.

PM Murekezi said that they want to increase threads production from 10 tonnes in 2015 to over 600 tonnes in the next three years. They are also mobilizing Rwandans to love locally made products through the ‘Made in Rwanda’ campaign,”

There are at least 900 firms in the country with the dominance of the small ones at 77 %. Big and medium firms represent 9% and 14% respectively. Challenges facing local industries in general include heavy costs of water and electricity which is also insufficient.

The industrial sector grew by 7% annually from 2010 to 2015, while Rwanda’s exports increased from $544 million to $1.1 billion in the same period. It increased by 18% annually on average.